The stock rose for a second day on Tuesday, climbing 2% by midday, after closing 1.5% higher on Monday. The gains came after Elliott disclosed a stake in the company and laid out several proposals for the board of directors in a letter published as the week began.

Elliott, known for taking relatively concentrated bets and publicly agitating for changes at its target companies, wants AT&T to adopt a new capital-allocation plan, cut costs from its operations, bring on experienced management, and stay away from making large acquisitions.

The company (ticker: T) said in a statement on Monday that it was reviewing Elliott’s proposals.

Barron’s has already pointed out that many of Elliott’s recommendations are already in the works at AT&T, including possibly starting share buybacks in coming months and reducing the company’s huge staff. Wall Street analysts largely backed up our view that AT&T is on the case, calling the hedge fund’s proposals positive.

Elliott wants AT&T to commit to returning half of its after-dividend free cash flow to shareholders in the form of buybacks, with the remainder directed toward paying down debt. The company has recently said that it is on track to meeting its year-end debt-reduction target and is considering buybacks.

UBS
’s John Hodulik said Elliott’s letter could make buybacks more likely.

“Aside from more aggressive cost cutting, we believe the letter could also spur discussions on the sale of DirecTV and formulize share buybacks,” Hodulik wrote in a report on Tuesday. “We believe management will continue to balance leverage vs. buybacks but given the low-interest rate environment and the near-term achievement of the leverage target, buybacks that were already under consideration could be crystallized sooner.”

Hodulik has a Buy rating and $38 price target on AT&T stock. The shares were recently at $37.50.

Elliott also suggested that AT&T review its entire portfolio, with an eye toward divesting assets and business units that aren’t core to its overall strategy. Telecom analyst Craig Moffett of MoffettNathanson noted that unfavorable trends in the satellite TV and traditional media industries could means that AT&T might not get an acceptable price for its DirecTV or Time Warner businesses if it did decide to explore spinning off those assets again.

AT&T completed the acquisition of DirecTV in 2015. Its purchase of Time Warner closed this year.

“Just breaking up the company, which is often the foundation of activist interventions, wouldn’t necessarily unlock much value; it could simply be the case that AT&T’s assets are valued as if they aren’t worth very much because, well...they aren’t worth very much,” Moffett wrote on Tuesday. He has a Neutral rating and $31 target price on AT&T stock.

For JPMorgan
’s Philip Cusick, Elliott’s letter may put the most attention on AT&T’s top management. The CEO of AT&T’s Communications division—its largest business—abruptly announced his departure from the company last month. WarnerMedia CEO John Stankey was then promoted to chief operating officer of AT&T, a newly created position that appears to put him in line for the top job whenever current CEO and chairman Randall Stephenson retires. Elliott reportedly wants both Stephenson and Stankey out, and to separate the CEO and chairman roles.

“Given all the challenges facing AT&T, the succession plan is likely to get more scrutiny, and the board may be forced to look outside the company,” wrote Cusick. He has an Overweight rating and $39 price target on AT&T stock.

Overall, Raymond James’ Frank Louthan sees merit in several of Elliott’s proposals but said he is skeptical about how much action AT&T will actually take. He noted that although the hedge fund’s $3.2 billion stake is sizable, it represents barely 1% of AT&T’s nearly $270 billion market capitalization, giving the fund little ability to force through change.

“[Telecom companies] can always find costs to remove no matter how ‘efficient’ they think they are, thus Elliot’s assessment is likely realistic, but we do not foresee significant shifts in this trajectory, nor do we see a shakeup in the C-suite or at the board as they are also calling for,” wrote Louthan, who has an Outperform rating and $35 price target on AT&T stock.

“Relative performance is a fair criticism, but we believe management will give more detail this month on the conference circuit addressing the concerns and describing how its strategy is more aligned with the Elliot letter than they make it out to be.”

AT&T has an analyst day scheduled for Oct. 29, focused on WarnerMedia and its coming HBO Max streaming service. Management may respond more directly to some of Elliott’s proposals then as well.

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